SUPPLY OF STEEL FURNITURE

Press, Volume LXXIII, Issue 22195, 11 September 1937, Page 9

SUPPLY OF STEEL FURNITURE

STATE ACTIVITIES DISCUSSED ORDERS FOR GOVERNMENT BUILDINGS MINISTER'S REPLY TO COMPLAINT [From Our Parliamentary Reporter] WELLINGTON. September 10. "The whole matter has been ventilated in the newspapers, and I do not propose to enter into any further controversy." said the Minister for Railways, the Hon. D. G. Sullivan, when asked to comment on allegations of unfair proceedings made against the Railways Department by J the Precision Engineering Company. The Minister was shown a statement j which the company has referred to "The Press," alleging that the department has taken action designed to eliminate competition in the provision of steel furniture and office equipment for Government buildings. j

The company's case, as submitted to "The Press," was: "Before Af>ril. 1936. the Railway Department was allowed to tender for steel furniture required by Government departments. At that time, however, it was exempt from exchange on imported steel, this being borne by the Treasury. Only on that basis was the der&rtment able to compete in price with the Precision Company. In April. 1936, the Cab net instructed all departments to place their orders with the railway workshops, without competitive tenders being called. As long as they were in competition with our firm, the railway workshops were exempt from exchange on imported materials. Only when our competition wss eliminated were the railways at last required to pay exchange. However, the outside manufacturer was still free to compete for orders by private contractors doing work for the Government. During this period, our company was able to obtain many substantial orders from this source, including, incidentally, a further 200 steel lockers for the Kingseat Mental Hospital A Case Quoted "One definite case showing that the railway workshops still cannot compete is found in the Sunnyside Mental Hospital, Christchurch. Recently, and within a month of each other, our company and the railway workshops supplied lockers to this hospital, the specifications being identical; but the Precision lockers being immensely superior in quality. Our price was £207. and the railway price £227, and this although the railways are still exempt from rates and taxes. Within the last few weeks, therefore, a new provision has been introduced in the specifications for jobs to be let, even to private contractors, namely, that they also must in future buy their steel furniture from the railway workshops, without competition being allowed.

I "The first of such specifications are i for the Kingseat Mental Hospital, and the Wellington Dental Clinic, two contracts to be let to outside contractors, but both stipulating that the steel furniture must be obtained from the railway workshops. It is thus obvious that the new provision is inserted deliberately to cut out our competition, because the railways could not get the order as long as they had our competition to contend with. Otherwise there would have been no point in expressly providing that the railways must be given the order without competition being allowed." No Advantage In reply to these charges, Mr Sullivan referred "The Press" to a statement he made answering them last month, when the case was raised in Wellington. His reply then claimed that the company had enjoyed and was still enjoying a substantial share of Government work. The Minister denied that the Railway Department had any advantage over private enterprise in exchange and the payment of import duty. The Minister then said: "Actually the position disclosed by the flies shows that the subject, like Vesuvius, breaks out afresh from time to time, although it has been quiescent for the last two years. All of the out- j breaks have had the Precision Engin- j eering Company as their main driving j force, and it is fairly common know- ; ledge that those who have been ex-; pected to fight the company's battles . have lorn? since lost their keenness. This is not to be wondered at when the alleged facts on which the company supports its case are so inaccurate and misleading. The company complains of unfair competition because the department does not pay exchange or primage duty on imported materials the same as private industry is required to pay. Was it an accidental or intentional error on the part of the company when it overlooked the fact that the materials referred to are admitted free of and also that all Government departments tlo, in accordance with the decision of the Government, pay exchange on all materials imported from Great Britain. So that on these two points oi complaint private enterprise is on precisely the same footing as the railways "

No Department Tender Dealing with the Kingseat Hospital case Mr Sullivan said that no price was' mentioned in the specifications, nor had a tender been received by anyone from the Railways Department iat the time the company's letter was 1 written, or when the Wellington Chamber of Commerce had discussed the matter. As lor the dental hygiene dei partment's job, the Railways Department knew nothing about it. and had not been asked to quote. The amount mentioned in the specifications for that job was an estimate prepared by the I Public Works Department after ot>I taining the probable cost from the l Precision Engineering Company, and I making an allowance for any increase in the cost of imported materials, due to the fact that it would be some time before the order was actually placed. Mr Sullivan said that he could not emphasise too strongly that the price quoted in the specifications was not the railway price, nor could he repudiate too definitely that the Railways Department was exempt from the payment of exchange. As sheet metal imported from Britain was free of duty to private enterprise as well as to the Railways Department, the latter had no advantage in that respect either. The Minister said that the present Government had not altered long standing policy on the auestion of extending the field of the Railway Department's operations in the manufacture of steel fnmitiire. although the policy of the Labour Government had undoubtedly resulted in a greater volume of activity, both in regard to Government business Ifid. in-